DBH’s profit streak held back for lower flat sales

Delta Brac Housing Finance Corporation, or DBH, one of the leading listed non-bank financial institutions, logged in higher profits last year though its interest income dropped.

In 2019, the housing financier's profits rose 2.77 per cent year-on-year to Tk 107.69 crore. However, profit-before-tax dropped 3.59 per cent to Tk 155.59 crore.

The company's home loan book expanded at a meagre pace of 1.54 per cent to Tk 4,452 crore during the year.

The price of raw materials, particularly the price of rod and cement, went up during the year, as a result of which the price level of apartments increased further, DBH said in its annual report.

This hurt flat sales, so the home financier's fortunes were also squeezed, it added.

"Thanks to the liquidity crisis in the financial market we had to offer a higher interest rate on deposits. So, our net interest income fell," said QM Shariful Ala, managing director and chief executive officer of DBH.

At the close of 2019, DBH's deposit portfolio stood at Tk 4,341 crore, against which Tk 148 crore of interest is payable.

DBH's net interest income, which is its main income source, fell 4.57 per cent to Tk 171.07 crore, according to the annual report of 2019.

The NBFI's income from the capital market also dropped 41.6 per cent to Tk 2.68 crore.

"We keep more provisions than what is stipulated by the central bank's guidelines, so our financial strength is very good."

The NBFI's total classified loans reached Tk 20 crore, with its default loan ratio being 0.45 per cent at the end of 2019.

DBH is the only institution among all the banks and NBFIs that has been getting AAA credit rating at a stretch, he said.

But Ala is not as sanguine about 2020.

"This is an abnormal year due to coronavirus, so there would be some negative impact on all companies' fortunes. But we will have to manage it," he added.

DBH, which got listed on 2008, traded at Tk 92.60 on March 25, the last trading day before the bourses shut for the countrywide general shutdown enforced to flatten the curve on coronavirus.

The company is providing 20 per cent cash and 15 per cent stock dividend to its shareholders for the year ended on December 31, 2019. It provided 25 per cent cash and 10 per cent stock dividends previously.

Sponsors and directors hold 51.32 per cent of DBH's shares, with rest in the hands of the public.